Offshore Drilling Seen as Safer Than Before 2010 BP Spill

By Jim Efstathiou Jr. -
Apr 17, 2013

Offshore drilling is safer than
prior to the BP Plc (BP/) spill in 2010 even though the U.S. Congress
has failed to pass legislation tightening rules, according to
members of a government panel that investigated the accident.

Response to spills has “substantially improved” since
BP’s Macondo well in the Gulf blew out on April 20, 2010,
killing 11 workers and spewing more than 4 million barrels of
oil that spoiled the shores of Gulf Coast states, the group, Oil
Spill Commission Action, said today. The group includes former
members of a panel appointed by President Barack Obama that in
2011 recommended steps to prevent future spills.

While regulators and the drilling industry have responded
to the recommendations, Congress hasn’t, said Bob Graham, a
Democrat and former Florida senator who was co-chairman of the
presidential commission. Congress earned a “D+” today, higher
than its “D” grade in 2012, a year after the commission’s work
ended with the delivery of its report to the president.

“Three years have passed since the explosion and Congress
has yet to enact one piece of legislation to make drilling
safer,” Graham said today in a video news conference. “Most
safety provisions we discussed are regulatory, administrative.
These issues are of significant national importance that they
should be enacted in statute.”

The group’s 2013 report card maintained a “B” grade for
the administration and raised the industry’s mark to “B-minus”
from “C+.”

Pending Recommendations

Among the recommendations awaiting congressional action is
a proposal for drilling companies to pay a fee that would cover
costs for improved U.S. inspections and oversight. Gains made in
that area may be undermined by automatic budget cuts known as
sequestration that took effect March 1, Graham said.

Another recommendation is for Congress to review the $75
million ceiling on spill liability in place for more than 20
years. That amount would have been exhausted within days of the
BP spill, crippling work to restore soiled coastlines and
damaged industries, Graham said.

The liability cap proposal and other issues were discussed
this week in a meeting the group had with Senator Ron Wyden, the
Oregon Democrat who heads the Energy and Natural Resources
Committee, Graham said.

“We can anticipate the committee to be giving attention to
these issues,” Graham said.

Interior Overhaul

A month after the BP blow out, Obama replaced the Interior
Department’s Minerals Management Service, faulted for lax
regulation of offshore drilling, with three offices to issue
leases, oversee drilling safety and collect royalties The agency
has strengthened leasing, permitting, safety and oversight,
according to today’s progress report from the group.

BP, which is based in London, is appealing a court ruling
upholding decisions by the administrator disbursing cash from an
$8.5 billion settlement that the company says will force it pay
billions more than expected. The company will face a jury trial
Aug. 25, 2014, in federal court in Houston on investors’ multi-
billion-dollar allegations that the company hid the true size of
the spill to limit the effect on its stock price.

The U.S. has made gains to improve safety in regions such
as the Arctic, where pressure is mounting to develop oil and
natural gas resources, said Frances Ulmer, a commission member
and former chancellor of the University of Alaska Anchorage.

Royal Dutch Shell Plc (RDSA), which has spent about $4.9 billion
and seven years preparing to explore off Alaska’s north coast,
was blasted by the government for mishaps in its work last year.
A department review found shortcomings in oversight of Shell’s
contractors and said the company started its work “not fully
prepared” for the challenges it faced.

“A lot of work has been done by all the parties advancing
our understanding of the Arctic,” Ulmer said. “We continue to
believe that unless both the industry and government focus
intently on preventing, preparing and planning, that we will not
be as ready for these frontier areas as we would like.”